Types of Index Numbers

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Topics

  • Price Index Number
  • Quantity Index Number
  • Value Index Number
  • Special Purpose Index Number

Notes

Types of Index numbers :

1) Price Index Number :
It measures the general changes in the prices of goods. It compares the level of prices between two different time periods. The Consumer Price Index (CPI) and Wholesale Price Index (WPI) are major examples of a price index. 
2) Quantity Index Number :
It is also called volume index number. It measures changes in the level of output or physical volume of production in the economy. For example, changes in agricultural production, industrial production etc. over a period of time.
3) Value Index Number :
The value of a commodity is the product of its price and quantity (p × q). Value index number measures the changes in the value of a variable in terms of rupee. It is a more informative index as it combines both, changes in the price as well as quantity. The value index is utilized for inventories, sales, and foreign trade, among others.
4) Special Purpose Index Number :
They are constructed with some specific purpose. For example, import-export index numbers, labour productivity index numbers, share price index numbers etc.

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